Greece: Financial System Stability Assessment

The first Financial Sector Assessment Program (FSAP) of Greece since 2006 has found risks to financial stability were low prior to the start of the war in the Middle East and remain manageable. The Greek financial system has experienced significant consolidation since the Greek Sovereign Crisis and is dominated by four systemically important (SI) banks. These banks underwent major asset cleanups through the securitization and sales of non-performing loans (NPLs) since 2019. They now enjoy strong balance sheets, profitability, and liquidity on the back of low-cost deposit bases and loans to domestic non-financial corporates (NFCs). However, mortgage and SME lending markets remain limited, partly due to the slow pace of resolution of the large stock of NPLs now managed by credit servicers (approximately 2.9 million loans from 2.4 million borrowers out of a population of 10.4 million people). Other non-bank financial institutions (NBFIs) play only a limited role in the Greek financial system.